Jump to content

Pretty nice day for ACF holders


dcollon
 Share

Recommended Posts

I own both LUK and FAIRX.

 

According to Morningstar, approx 5% of FAIRX's portfolio is ACF.  Yesterday, ACF's surge of ~25% means approx 1.2% to FAIRX's NAV.

 

 

 

Yeah, not a huge gain to FAIRX's NAV solely on the take out, but ACF was a beautiful investment since its inception. 

Link to comment
Share on other sites

LUK is still in the too hard pile but im getting there. I look forward to being an owner sooner or later.

 

Agreed. I've followed the company for a while and view some of their investements as high risk, and their investments are all over the place. I question their knowledge (circle of competence) in all of the wide variety of industries they invest in.

Link to comment
Share on other sites

LUK is an extremely simple company to understand. I have no idea where this stereotype came from that they are "too hard." As for circle of competence, one of the reasons for their success has been that they are hardcore believers in operating within their circle of competence and boy are they focused on it! It's fascinating how there can be so much divergence of opinion on it, from one extreme to the other which is why there is a great opportunity for hidden value.

Link to comment
Share on other sites

LUK is easy to understand but I dont have any idea what they are worth. They stay within the Deep value circle of confidence which is why the assets are a hodgepodge of companies / businesses. I would prefer if they got some scale and purchased material deep value businesses vs. very small immaterial businesses. Berkadia seems like a move in the right direction.

 

Putting a 10x multiply on the owned businesses and modeling the investment portfolio / mining note is what i would typically do but the owned businesses through off very little cash flow (most appear to be hit hard by the recession), and I have no idea what ACF, Jef, and the mining assets are worth. All three businesses arent in my circle of confidence. Mining would be the easiest but its pretty much a play on China / Recovery, and I have slight doubts on each.

 

Fairfax and Loews are much harder to understand then LUK. But I can put together an investment thesis fairly easily for them. FFH is insurance and investments. Loews is oil and gas / drilling / pipelines. With LUK for some reason I cannot. I can say FFH and Loews is worth x and I am getting it at Y. With LUK I dont know what its worth.

 

---

 

Its an owner manager stock and just about everyone I like or respect has a bit of it. So I keep watching and waiting for the ah ha moment.

 

Also most of the discussion on LUK seems to be similar to this. People say they are cheap. Others say they cant understand it. With FFH and Loews, the discussions are centered on breaking down the company and identifying the catalysts for each.

Link to comment
Share on other sites

FFH is an insurance company that strives to use float and free cash flow for investments, so I think they're pretty easy to understand. Basically the same type of business as BRK and MKL.

 

I think Loews is pretty easy to understand, as it's basically a collection of a few unrelated (Hotels, oil and insurance) mediocre companies, but I've never really liked the company. They're very unpredictable and a greatly effected by downturns in the economy, as they're a collection of mostly very volatile businesses.

 

 

Link to comment
Share on other sites

FFH was fairly complicated a few years back. They had bits and pieces of 2 public companies and had underwriting was all over the map. To get to the heart of the investment thesis you would have to have dug. Investments and CDS has propelled FFH. I also wouldnt call the insurance business easy to understand for most folks. To know that FFH had large unrealized gains in Bonds and CDS took a bit of knowledge and background.

Link to comment
Share on other sites

What is Harry Long's thought on Fairfax.  They seem like better capital allocation people than underwriters, but I don't have a strong opinion on this and don't want hell to come down on me from the board.

 

Note I currently don't own the stock and haven't followed it as much as iused to (although my investment club bought it in the mid 200's and own it through a partnership.)

 

I agree with myth that Luk is more difficult to follow.  I always tracked it by acf, jef and fortescue, the poor mans shortcut.

Link to comment
Share on other sites

FFH and LUK did well with ACF... :D

 

I picked the wrong one for the buyout - Sure didn't see it coming even with some press about GM wanting to re-acquire GMAC. Wake up Eric,  but owning FFH and LUK didn't hurt.

 

However, I hold a position in Nicholas Financial (NICK) a small cap $100M, high risk auto finance company. They reported strong 1Q profit, up 58%, but I think they are still under-valued. Limited analyst coverage (Jefferies - I wonder why).

 

Perhaps because of FFH & LUK's experience they might be interested in another auto finance company?

 

Is anyone tracking NICK, any thoughts?  I've considering making this a larger position...

 

 

 

 

 

Link to comment
Share on other sites

I too like NICK.  I bought it prior to crash and really loaded up when it got to the 2-3 dollar range.  I think it should get to 10-12 before it starts to be fully valued.

That is my 2 bit opinion and it is worth exactly what it cost you.

Link to comment
Share on other sites

  • 5 months later...

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...